Skip to main contentCambridge University Reporter

No 6357

Wednesday 24 September 2014

Vol cxlv No 1

pp. 1–22

Reports

Report of the Council seeking authority to extend Phase 1 of the North West Cambridge development

The Council begs leave to report to the University as follows:

1. By Grace 1 of 28 November 2012, approved by ballot, the Regent House gave authority to proceed with the development of a first phase of development at North West Cambridge (Reporter, 6295, 2012–13, p. 342). The Council’s Report dated 22 October 2012 (Reporter, 6282, 2012–13, p. 59) describes how the North West Cambridge development will help the University to maintain its global research profile through the provision of affordable and suitable accommodation for University and College staff (primarily postdoctoral researchers), academic and commercial research floor space, accommodation for post-graduate students and local centre facilities to support the new community. The development will also provide housing and facilities for the City more generally. The first phase of development will provide over one third of the ultimate residential accommodation on the site, as well as local centre facilities to help establish a quality of place and sense of community from the outset.

2. By March 2017, the currently approved first phase of development will have been built and occupied. This will include 530 homes for University and College key workers, 325 postgraduate student rooms, land for 700 units for market sale, a local centre (including food store, shops, primary school, doctors’ surgery, community centre), and other related facilities, open space, and infrastructure.

Provision of key worker housing

3. Key worker housing for University and College staff forms the core of the University’s development in the first phase, with 530 units comprising one-, two-, and four-bedroom (shared) flats, and three-bedroom family houses. All of these homes will be let on a subsidised basis to qualifying employees.

4. The design of the housing has been guided by advice from the Accommodation Syndicate and the Accommodation Service. The Office of Postdoctoral Affairs, which has been established to provide an academic, administrative, and pastoral focus for the postdoctoral community, will have a base in the North West Cambridge development.

Development opportunity

5. The central Lot within the local centre (Lot 2), which is being designed by Stanton Williams, includes 264 key worker homes, as well as a permanent base for the Office of Postdoctoral Affairs, and additional retail units onto the market square (see annexed plan). Only 100 of the housing units have currently been planned to be built in Phase 1, with the remaining 164 units being planned for a later phase. However, by bringing these additional units forward into Phase 1, the University would make available a larger key worker housing resource more rapidly, and also complete the Lot within the first phase, to provide a better and more natural built edge to other Lots and provide less disruption for the new occupants of student accommodation in Lot 5 and residents in Lot 3. These buildings also provide further ground-floor space for the Office of Postdoctoral Affairs, and including this within the first phase would provide more coherent facilities from the beginning to respond to the needs of the expanding postdoc community.

6. With this extension, the University will be providing approximately 700 key worker homes within the first phase which will make a significant contribution to the University’s housing needs, and facilitate further recruitment and retention of research staff.

7. The additional development would be financed through use of further income from land receipts, but would result in a higher borrowing requirement over a limited period. There is a potential economy of scale and cost saving through the inclusion of these units within the first phase and incorporating them into a single Lot 2 contract.

The Finance Committee and the Council have for their part approved an increase in the borrowing limit from £242m to £311m (with short term flexibility to £320m) to allow Phase 1 to be extended to include a further 164 key worker units. Formal approval is now sought from the Regent House to proceed with the extension to Phase 1.

8. The Council recommends:

I. That approval be given for the extension to Phase 1 of the North West Cambridge development as described in this Report.

22 September 2014

L. K. Borysiewicz, Vice-Chancellor

Andy Hopper

Susan Oosthuizen

N. Bampos

Richard Jones

Rachael Padman

Jeremy Caddick

Fiona Karet

John Shakeshaft

Stephen J. Cowley

F. P. Kelly

Jean Thomas

Athene Donald

Mark Lewisohn

Evianne Van Gijn

I. M. Le M. Du Quesnay

Rebecca Lingwood

I. H. White

David Good

Mavis McDonald

A. D. Yates

Helen Hoogewerf-McComb

Annex: Phase 1 University Lots

Nineteenth Report of the Board of Scrutiny

The Board of Scrutiny beg leave to report as follows:

1. The Board of Scrutiny could be described as the University’s ‘watchdog body’. It forms part of the official mechanism for ensuring that the University is run in a way that is transparent and is accountable to the governing body of the University, which is the Regent House. It comprises eight directly elected members who serve for a period of four years, and the Proctors and Pro-Proctors (who are nominated by the Colleges and formally elected by the Regent House). Of the members who are directly elected by the Regent House, four retire and four new members are elected every two years. Further information is available on http://www.scrutiny.cam.ac.uk/.

2. The Board has a statutory obligation ‘to scrutinize on behalf of the Regent House’:

(a)the Annual Report of the Council;

(b)the Abstract of the Accounts of the University; and

(c)any other Report of the Council proposing allocations from the Chest.

It also has the right to report to the University on any matter falling within the scope of this scrutiny, to examine the policies of the University and the arrangements made for the implementation of those policies, and has the power to inspect any documents that are relevant to any enquiry that it is empowered to make. The Board, with the best interests of the University in mind, aims to carry out its functions in a constructive manner. Since its inception, the Board’s practice has been to publish a single Report exploring the themes that emerge from these official documents, rather than a series of separate Reports on Reports. This Nineteenth Report follows this tradition.

3. In discharge of these obligations during the academical year 2013–14 the Board has met fortnightly during each Full Term with five additional meetings in June and July to finalize this Report. It held formal meetings with the Vice-Chancellor, the Pro-Vice-Chancellor (‘PVC’) for Institutional Affairs, the PVC for Education, the Senior PVC, the Registrary, the Director of Finance, the Director of Human Resources (‘HR’), the Director of Physical Education, the Director of the Institute of Continuing Education, the Secretary of the Board of Graduate Studies and the President of the Cambridge University Students Union (‘CUSU’). The Board is most grateful to all of these individuals for the time and assistance they have given.

4. The Board was provided with part-time administrative assistance this year by Ms Emma Easterbrook. Her help has been invaluable.

5. The Board has provided a summary of the recommendations that it made in its Eighteenth Report together with the Council’s responses in Annex A.

Financial matters

6. The financial statements for the University (excluding Cambridge University Press (‘CUP’) and Cambridge Assessment) for 2012–13 show a modest decline in the operating surplus of the University. Total income grew by just under 7.7 per cent from the previous year, while expenditure grew by 8.5 per cent and the surplus retained in general reserves decreased from £42.5m to £39.1m. With the inclusion of Cambridge Assessment and CUP, the Group results show a surplus of £23.1m for the year compared with a surplus of £4.6m in the previous year. The segmental analysis also shows further detail of financial performance. The surplus on continuing operations in the Education and Research segment was reduced from £35.3m to £31.3m. Given the continuing pressures on the higher education sector, these financial results are pleasing. The Board would like to congratulate the Senior PVC and the Director of Finance for their continued efforts that led to these results.

7. The financial results for 2012–13 were supported by continued growth in endowment and investment income. The University’s consolidated accounts are required to show the income from the Cambridge University Endowment Fund’s (‘CUEF’s’) underlying investments. If, however, the accounting treatment had been based on the distributions by the CUEF, which better reflects the total return investment approach adopted in the management of the endowment, total endowment and investment income for the University group grew to £81m from £73m. This would have resulted in an overall surplus for the year retained within general reserves of £99m compared with £70m in the previous year.

8. The CUEF’s financial year runs to the end of June and performance analysis for the endowment is monitored to that date. In the year to June 2013 the CUEF generated a return of 20 per cent, significantly better than the long-term return target of RPI plus 5.25 per cent and other comparable endowment funds. While performance information is not yet publicly available for the current financial year, the CUEF is expected to report good investment returns in the year to June 2014. The long-term investment performance of the CUEF remains good: over the five years to June 2013 the average annual total return has been 8.3 per cent per annum, slightly ahead of its long-term target.

9. The Board would also like to thank the Director of Finance and the Investment Office (‘IO’) for providing additional information on the CUEF in the annual accounts and in the Financial Management Information Special issue of the Reporter. While the IO has managed to produce excellent returns, its long-term return target remains ambitious. Other comparable foundations and endowments have reduced their drawdown rates in response to changes in market conditions and overly ambitious targets create two potential hazards: that investment managers adopt excessive risks to chase returns, and that endowment recipients plan expenditures above a sustainable level.

10. The Board recommends that the total return objectives of the Cambridge University Endowment Fund be kept under review.

The Budget Report

11. Continuing tight budgetary constraint recommended by the Council ensured that the actual out-turn for the Chest in the 2012–13 financial year was £1.8m better than the budget forecast. The University achieved this result because total income was £1.5m greater than the budgeted sum, whereas total expenditure was £0.3m lower. The latest forecasts show projected surpluses in the Chest in the coming years to 2017–18. The latest forecast for 2013–14 now shows a projected Chest surplus of £3.8m, compared to the projected deficit of £0.3m in the 2012–13 Budget Report.

12. This modest improvement in the Chest’s financial health is largely attributable to the increase in the Chest share of indirect costs of research grants and contracts, which together with an improvement in endowment income has more than offset a reduced forecast for academic fees. Although academic fees are projected to rise over the planning round (with postgraduate numbers assumed to increase at an average of 2 per cent per annum), the Board notes the year on year volatility over the last ten years (for example, an increase of 13.2 per cent in 2005–06 and a drop of 6.1 per cent in 2007–08).1

13. The revised surplus projection for the Chest to 2016–17 is now £1m (in the 2013–14 Budget Report this was projected to be a surplus of £0.3m in 2016–17). The budget for 2014–15, and the projections beyond, remain based on some fairly optimistic assumptions. The pay assumptions have been recently increased from 1 per cent to 2 per cent for next year, but this increase is not yet factored into the projections for the remainder of this planning period; this will add an additional exposure of £10m to the Chest across the planning years, and may push forecasts back into deficit for some of the coming years.

14. The Board recommends that assumptions about annual increases in postgraduate numbers and in pay be kept under review.

15. The Board’s Eighteenth Report praised the financial constraints placed on the Unified Administrative Service (‘UAS’), and noted that in 2012–13, expenditure was expected to decrease by 1 per cent over the following four years. While total Chest and non-Chest expenditure on the UAS is still forecast to fall over the four years from 2014–15 to 2017–18 (from £46.5m to £44.6m), its budget for 2014–15 has risen by £2m from that forecast in the 2013–14 Budget Report. This increase is partly attributable to costs associated with proposals for new staff in Estate Management and the Research Office; Estate Management saw many leave the University through a voluntary severance scheme in 2011–12. Although recruitment will be largely into different roles from those lost, careful consideration of such voluntary severance schemes is suggested in the future, to avoid loss of valuable knowledge and expertise. The Board also notes the scale of the changes involved in the reorganization of the Development Office. Investment both in Cambridge University Development and Alumni Relations (‘CUDAR’) and Cambridge in America (‘CAm’) will require monitoring over the next three to four years to gauge its cost-effectiveness.

16. There are two main areas of financial risk for the University in the coming years: the North West Cambridge development, and potential liabilities in pension provision. Development has now begun at North West Cambridge, and the first tenants are expected in 2016–17. The funding of the project assumes that rental income will cover both the interest on the internal loan funding the development and will also accumulate to help repay the capital. This is linked to the coupon of £13.1m per annum on the public bond issues of £350m and its repayment by 2052.

17. The Board recommends that assumptions surrounding the financing of the North West Cambridge project should remain under constant review.

18. There are two main University pension schemes: the Universities Superannuation Scheme (‘USS’) and the Cambridge University Assistants’ Contributory Pension Scheme (‘CPS’). In addition, there is also a liability for two CUP defined benefit schemes that are closed to new members. The total pension cost incurred by the University Group in 2012–13 was £93.1m, a decrease of £3.3m (from £96.4m) over the previous year.

19. The CPS and the two CUP schemes are accounted for in accordance with Financial Reporting Standard 17, but the liability attributable to the USS scheme is not included in the accounts of the University. This is because it is not possible to separate and attribute the Cambridge-specific assets and liabilities of this multi-employer scheme. The total Group pension liabilities included in the consolidated financial statements for 2012–13 were reported as £363.6m, a decrease of £5.7m on the previous year (£369.3m). Of this reported sum, £291.1m was attributable to the deficit on the CPS and £72.5m was attributable to the deficit on the CUP schemes. The total potential liability is substantially larger as it does not include the University’s exposure to the USS scheme. The triennial valuation of the USS as at 31 March 2014 (publication awaited), is expected to show a significant deficit. The interim valuation as at 31 March 2013 showed a deficit of £11.5bn. Owing to the ‘last man standing’ nature of the scheme the University is one of its principal underwriters. The University projections assume an increase in Employers’ Contributions into the USS from 2015–16 (to 18 per cent from 16 per cent), but this will need to be kept under review.

20. The Board recommends that the University continues to engage actively with the Universities Superannuation Scheme to ensure that the scheme remains sustainable without undue risk to the University.

Estate strategy

21. The Board is aware of numerous projects affecting the University estate, and of plans to develop and add to existing provision. However, while the University has an overall vision of the development of the University estate, the Board did not discover either the existence of a comprehensive and strategic plan for the management of the University’s operational assets, or how future developments fitted in with the University’s mid- to long-term vision.

22. In particular, the Board noted that the relocation of Departments and Faculties, the changing nature of the student body, new building initiatives and the North West Cambridge project would all suggest the need for a comprehensive strategy which, even if loosely defined, recognized the need for their coordination and integration. The Board is aware that a combination of (necessary) small risks associated with each project could, when amalgamated, amount to a larger overall risk for the University.

Current projects

23. North West Cambridge

23.1 The Board notes that the involvement of Colleges with the development has changed, with four Colleges now committing to buy properties, and none indicating an intention to rent. The Board understands that it is now the intention that the University will take over management of this residential stock. The Board looks forward to reviewing the detail of how it is proposed to put this into effect, whether the residential levels will be achieved, and how the risk will be managed in the event of a shortfall of occupiers.

23.2 The Board notes that the distribution of residential and communal space is under review. It is uncertain whether it is intended to develop a bespoke post-doctoral centre or College and how this would relate to graduate accommodation and key worker housing. It is unclear how current plans will support the development of a thriving community of scholars.

23.3 The financial model for North West Cambridge remains under review. The Board notes that the integrity of the financial planning and its execution is of the utmost importance to the long-term prosperity of the University.

24. Mill Lane and Silver Street

24.1 There is ongoing discussion between the University and Colleges concerning the Mill Lane and Silver Street site. The Board encourages the University to develop and articulate an overarching strategy for this central site, and to consider it in relation to the future needs of the University and all the Colleges.

25. Sports Centre

25.1 The Board commends the University on the completion of the new sports facilities in West Cambridge, on which there is comment further below.

26. New Museums site

26.1 Significant redevelopment of the New Museums site is underway necessitating the relocation of various teaching facilities as well as examination rooms, the CUSU offices etc. Again, the Board notes the need for an integrated strategy in relation to building development and improved communication with the relevant interested parties.

27. Examination space

27.1 The Board notes that the first use of the new Sports Hall for examinations seems to have been a success. It is also aware of issues concerning the provision of suitable space, and of appropriate furniture within spaces, for examinations. The suitability of the new Sports Hall has thrown into sharper relief the relative unsuitability of other examination spaces and indicates uneven provision: for example, crowding, overheated rooms, small desks, shared bench seats, and noise.

27.2 While the Board understands the pressure on space and the challenges of conducting large-group examinations in multiple venues, the conduct of examinations is a critical part of its mission and one that impacts greatly on students. It is thus a prime example of why the University needs an estate strategy.

28. Other property in which the University has an interest

28.1 The University has disposed of parts of the accommodation formerly occupied by the Department of Physical Education. Without in any sense commenting on the substance of the decision to dispose of this asset, the Board encourages the University to ensure that there is sufficient transparency in relation to the disposition of any part of the University’s estate in order to forestall any misunderstandings about why and how such decisions are reached.

28.2 The Board notes that some of the space currently occupied by the Royal Cambridge Hotel is to be developed for University use. Again, the Board believes that an overarching strategy is needed to help prioritize the use of existing spaces and the competing calls on University space and funds.

29. The Board recommends that the University develop an overall strategy for the management of its estate and ensure transparency and good communication with the Regent House and other relevant interested parties.

30. The Board recommends that, as part of this strategy, the University address the variable nature and suitability of all spaces used for examinations.

Research strategy

31. Cambridge’s submission to the 2014 Research Excellence Framework (‘REF’) involved an enormous amount of work from individuals across the University. The Board awaits the results with interest.

32. The Board notes that sources and patterns of external funding for research in the University are undergoing change. The importance of the University keeping the situation closely under review is self-evident. In the Discussion of the Board’s Eighteenth Report, concern was expressed about the use of the very phrase ‘research strategy’.2 However, the Board emphasizes that the University’s ‘strategy’ in this regard, broadly conceived, must continue to preserve the academic freedom of researchers, including in disciplines for which funding is difficult to acquire.

33. In the same Discussion, it was suggested that the Board sounded insufficient warning about the imminence of open access requirements in its last Report. While the Board recognizes that the implications of open access (and the uncertainty surrounding them) are extremely worrying for a large number of researchers, it is confident that the relevant University personnel have made strenuous efforts to defend the interests of the University and its members on this fundamental supra-institutional issue. As such, the Board is encouraged that the University has made significant moves towards implementing the Higher Education Funding Council for England’s (‘HEFCE’s’) policy on open access before it formally comes into effect.

34. In its Eighteenth Report, the Board referred to open access funds being available on a ‘first come, first served’ basis.3 However, the availability of such University funding and the ‘first come, first served’ policy applies only to research funded directly by the Research Councils UK (‘RCUK’) and the Wellcome Trust. Researchers whose work is not so funded are unable to apply for support to cover article processing charges from the University using the website. This position is acceptable provided that publishers nationally and internationally accept HEFCE’s policy of requiring (only) ‘green’ open access to relevant outputs combined with an embargo period for the next REF, and that this policy continues.4 The University must of course keep the situation under review, and engage with the details of the prevailing policy and its implications for Cambridge researchers.

35. The Board recommends that the University take active steps to facilitate the signing of publication contracts by its members that are fully consistent with the Higher Education Funding Council for England’s policy on open access. The University must do so without compromising academic freedom.

Graduate experience

36. The Board notes that the number of postgraduate students is planned to rise by 2 per cent year on year and that this, and the increase in the total number of clinical medical students occasioned by organizational changes within the Clinical School, will intensify the demand for postgraduate student services within the Collegiate University as a whole. We welcome the establishment of a common basis for all main fees and charges in an era when RCUK support for College fees is being withdrawn.

37. The new Graduate Fee agreement agreed between the University and the Colleges has resulted in a standard per capita payment to the College. Because the RCUK funding gap has to be met by subsidy from the Chest, the Schools, and the Colleges in defined proportions, there will be some winners and some losers from this arrangement. The Board joins with those who have negotiated these complex matters in hoping that a clean, clear, and durable agreement has been reached, which will allow all concerned to move forward in improving the postgraduate student experience.

38. While overall satisfaction rates are relatively high for undergraduate students, the Postgraduate Taught Experience Survey reveals growing evidence of student dissatisfaction with some Master’s courses. The Board welcomes the moves to improve the M.Phil. experience by introducing a course director for every M.Phil. course to ensure that every M.Phil. student gets some one-to-one supervision and it also welcomes the review due in the coming academic year of the tuition and academic experiences of M.Phil. students. The Board trusts that the Departments and the Colleges will find themselves able to work together to achieve this end. The proposal that each M.Phil. course will have a published document detailing precisely what a student can expect of their course (i.e. contact hours, tests, and feedback as well as content) is highly desirable, as is interviewing for every short-listed candidate. The complaints of many postgraduate students about their Cambridge experience are based on a false perception that the traditional undergraduate experience is what they are going to get. The Board notes with concern the increasing numbers of cases being dealt with under the Student Complaints Procedure and the various Review Procedures for Examinations.

39. The Board welcomes the Graduate Fee agreement and efforts to improve the postgraduate experience.

40. The Board recommends that the resource implications of the Graduate Fee agreement and efforts to improve the postgraduate experience are carefully considered by the Schools.

Cost of an undergraduate education

41. In its Eighteenth Report, the Board recommended that the University publish ‘details of how the cost of an undergraduate education is calculated’. The Board thanks the Planning and Resource Allocation Office for making this information available.5 The Board regrets, however, that this information is not accessible to those without a Raven account. The Board also recognizes that the details of the calculation methodology may change over time, and so hopes that this information will be kept current and published without restriction.

Information technology

42. The Board notes that information technology provision in the University is an area of rapid change with the merger of the University Computing Service with the Management Information Services Division to form the University Information Services and their move to the Roger Needham Building in West Cambridge. The Board intends to monitor developments under the new management and governance arrangements, and in the new premises.

Risk management

43. On at least two occasions this year, there has been negative press coverage about the propriety of donations received by the University.6, 7 This has been a recurring theme for Cambridge (as with other leading universities) with a controversy arising every few years.

44. The Board recommends that the Council must know the identity of the principals behind every donation, and assure itself that every donation complies with current money laundering legislation.

Sports

45. In the new Sports Centre the University now has a world-class facility equipped to meet a broad set of needs from recreational to elite level competition, for individuals and teams alike, while offering the opportunity for more people to participate in sport and well-being activities. This is the end of the first phase of a long-term, comprehensive strategy for sporting infrastructure.

46. Currently the cost of membership of the Fitness Suite is perceived as expensive by many students and some feel the facilities are too far from their Colleges. Phases 2 and 3 of this project remain unfunded and all the reserves have apparently been spent. The Board is therefore concerned about the long-term financial model for the new Sports Centre.

47. The Board recommends that the financial model for the Sports Centre be given careful attention.

48. The Report on the governance and management arrangements for sport led to a lively discussion within the University.8 The proposed structure is intended to strengthen the position of sport by giving it a direct line of accountability to the Council and the General Board, and direct access to the well-established annual Planning Round. However, it remains unclear to the Board how the new arrangements will apply to non-competitive sports, which currently are funded by the Societies’ Syndicate, not the Sports Syndicate, and it will be interested to see clarification of this issue.

Administration and governance

49. The University has a duty to see to the proper governance of business subsidiaries such as the Press. Commercial best practice is for such enterprises to have a board of independent non-executive directors with relevant business and professional expertise to oversee the work of the Press’s executive management. Yet the Press Syndicate consists of eighteen senior members of the University, plus some co-optees, and the Board consists of executive management. The few independent non-executives have been sidelined into an ‘operating board’, which is far from best practice.

50. The Board recommends that as the Press Syndicate is the main oversight body it should have a majority of non-executive directors, who are not employees of the University, and the operating board consequently should be discontinued.

51. The Board notes that under the new Statutes (which came into effect on 11 February 2014) the Regent House continues to be ‘the governing body of the University’ (Statute A III 1). Whilst it is necessary for efficient governance that many of the powers of the Regent House be delegated to other appropriate bodies, the primacy of the Regent House must be maintained, and this requires that there be adequate consultation between the Regent House and those exercising powers on its behalf. In previous Reports, the Board has commented on instances where, in the opinion of the Board, this consultation has not been as extensive as it might have been – for instance, in its Fifteenth Report, the Board commented in detail on the revision of the then Statute U, the installation of the lift in the University Combination Room, and the Review of Teaching and Learning Support Services.9

52. The Board recognizes that the exact boundaries of what constitutes the routine business of the University (which does not require consultation with the Regent House) are subject to change. This year, it has been brought to the Board’s attention that a new University HR policy on sickness absence has been introduced without sufficient notice for comment from the Regent House and affected staff.10

53. The Board recommends that sufficient notice be given of all new substantial policy changes, as well as any major changes to existing policies, so that the Regent House and any affected individuals can comment if appropriate.

Summary of Recommendations

1.The Board recommends that the total return objectives of the Cambridge University Endowment Fund be kept under review.

2.The Board recommends that assumptions about annual increases in postgraduate numbers and in pay be kept under review.

3.The Board recommends that assumptions surrounding the financing of the North West Cambridge project should remain under constant review.

4.The Board recommends that the University continues to engage actively with the Universities Superannuation Scheme to ensure that the scheme remains sustainable without undue risk to the University.

5.The Board recommends that the University develop an overall strategy for the management of its estate and ensure transparency and good communication with the Regent House and other relevant interested parties.

6.The Board recommends that, as part of this strategy, the University address the variable nature and suitability of all spaces used for examinations.

7.The Board recommends that the University take active steps to facilitate the signing of publication contracts by its members that are fully consistent with the Higher Education Funding Council for England’s policy on open access. The University must do so without compromising academic freedom.

8.The Board recommends that the resource implications of the Graduate Fee agreement and efforts to improve the postgraduate experience are carefully considered by the Schools.

9.The Board recommends that the Council must know the identity of the principals behind every donation, and assure itself that every donation complies with current money laundering legislation.

10.The Board recommends that the financial model for the Sports Centre be given careful attention.

11.The Board recommends that as the Press Syndicate is the main oversight body it should have a majority of non-executive directors, who are not employees of the University, and the operating board consequently should be discontinued.

12.The Board recommends that sufficient notice be given of all new substantial policy changes, as well as any major changes to existing policies, so that the Regent House and any affected individuals can comment if appropriate

9 July 2014

R. Charles (Chair)

M. J. Franklin

Brian Sloan

Ross Anderson

Jonathan Holmes

Dick Taplin

Bruce Beckles

S. J. Lucy

Paul Warren

M. J. Dixon

Hugh Shilson-Thomas

David Woodman

Annex A
Summary of the Board’s recommendations in its Eighteenth Report and of the Council’s responses

Recommendation 1

The Board again recommends that the total return objectives of the Cambridge University Endowment Fund be reviewed and that more realistic and achievable targets be set.

Response: The Investment Board considers the risk profile carefully at each of its meetings. Asset allocation targets for subsequent periods are approved. Portfolio risk constraints such as manager concentration, liquidity, currency exposure, and capital commitments are monitored closely by the Investment Board.

The portfolio is constructed and managed appropriately for a long-term endowment and is not structured to take on unnecessary risks in pursuit of a short-term target. The Council, on the advice of its Investment Board, remains of the view that consistency and patience are important in achieving an investment objective, and is pleased to note that for the five years since management arrangements for the Cambridge University Endowment Fund (CUEF) were revised the investment performance has exceeded the long-term objective by 0.2% on an annualized basis.

Recommendation 2

The Board recommends that there be much greater transparency in matters relating to the management of the Cambridge University Endowment Fund.

Recommendation 3

The Board recommends that the Annual Report distributed to all investors in the Cambridge University Endowment Fund be published in the Reporter.

Response: The Council intends to publish the CUEF Annual Report to the wider University community in the Financial Management Information edition of the Reporter from January 2014.

Recommendation 4

The Board recommends that the University engages proactively with the Universities Superannuation Scheme to ensure that the scheme remains sustainable without undue risk to the University.

Response: The Pensions Working Group of the Finance Committee keeps the position of the Universities Superannuation Scheme (USS) under close review. There is active participation in the Employers Pensions Forum and its USS sub-group, which were established by Universities UK (UUK), the Universities and Colleges Employers Association, and GuildHE to discuss current and longer term pensions issues. The Council shares the Board’s wish that the Scheme remains sustainable without placing undue risk on the University and will be seeking to promote policies for adoption by USS that achieve these objectives.

Recommendation 5

The Board recommends that the Council ensures that there is better co-ordination between projects.

Response: The Board refers in its Report to one example of the need for better co-ordination, that of the move of IT infrastructure from the Arup Building on the New Museums site. The need to relocate IT infrastructure to a purpose-built Data Centre on the West Cambridge site11 on a compressed time-scale was the result of a combination of factors, most of which were unavoidable. In the event, the transition has been implemented successfully and on schedule under the auspices of the IT Systems Transition Project Board. The need for better communication between Estate Management and Information Services was noted by the Project Board at its final meeting and the relevant directors agreed to put the necessary mechanisms in place. A full cost report is now in preparation and will be brought to the Planning and Resources Committee before the end of the Michaelmas Term. However, it is likely that the additional costs of temporary provision will be less than originally anticipated.

Recommendation 6

The Board recommends that the University ensures that its implementation of the open access scheme does not disadvantage any particular subject areas.

Response: The Council welcomes the Board’s support for the University’s approach to open access, which is based on upholding academic freedom in the choice of research outputs. The University is keenly aware of the concerns amongst some scholarly communities about the potential for particular subject areas or career stages to be disadvantaged by publication fees, and is committed to ensuring a fair allocation of resources.

The Council has already noted Professor Evans’ concerns about open access, raised in her remarks on the Annual Report of the General Board12 and will continue to monitor the situation. As noted in the Council’s Report on the financial position and budget of the University,13 the University’s research strategy and the investment in the Research Strategy Office enables the University to respond to large, collaborative, strategic bids for research funding.

Recommendation 7

The Board recommends that the Council pays particular attention to the direction, budget, and location of Cambridge in America and any other regional development bodies that may be established, and ensures that reporting lines are clear.

Response: The budget for Cambridge in America is agreed annually through the University’s planning round, including the contribution from the Chest. The University is represented at senior levels, including the Vice-Chancellor, on the Board of Cambridge in America (CAm), and is similarly involved in the current search for the organization’s new Executive Director. There is joint agreement between the University, the Board, and the Colleges that the new Executive Director and the staff in CAm will work closely with the Executive Director of Development and Alumni Relations and her staff. The new arrangements will include the setting of a strategy and priorities for CAm to benefit the wider interests of Collegiate Cambridge. There are no plans to establish other regional development bodies at present but should that be the case proposals would include clarity about legal structures and reporting lines.

Recommendation 8

The Board recommends that the Council gives further consideration to availability of affordable accommodation for graduate students.

Response: The provision of additional graduate accommodation is a key element of the agreed plans for North West Cambridge. Some 325 places are included in the plans for Phase 1. Charges for that accommodation will be made on the basis of the financial plan for North West Cambridge that the Regent House has approved.14 Discussions are continuing with a consortium of Colleges interested in the rental of some or all of this accommodation and with a second consortium for the purchase of some homes for staff and students with partners. In addition the Council understands that some Colleges are taking steps to expand their graduate accommodation on other sites.

Recommendation 9

The Board recommends that the University publishes details of how the cost of an undergraduate education is calculated.

Response: This information is available at http://www.admin.cam.ac.uk/cam-only/offices/planning/costUG/.

Recommendation 10

The Board recommends that the Council monitors the reorganization of IT services to ensure that the needs of all users are met, and keeps other central IT providers under review.

Response: A Transition Advisory Group has been constituted under the chairmanship of Professor Ian Leslie to provide advice and support during the period of transition. In addition, the Information Strategy and Services Syndicate (ISSS) and its sub-committees will continue to function until the new Information Services Committee is established during the course of 2014.

Recommendation 11

The Board recommends that the Council ensures that the Data Centre is sufficient for the University’s needs and that sufficient funds are set aside for the commissioning of the ‘fallow hall’.

Response: On current projections there will be sufficient spare capacity within the Data Centre to accommodate the short- to medium-term needs of Departments. The Data Centre Steering Committee will continue to monitor demand and will seek funding for the fourth hall fit-out when appropriate.

Recommendation 12

The Board recommends that a University IT Security Strategy be developed and implemented, and that guidance be provided on the appropriateness of the use of external storage providers.

Response: The Council agrees and notes that the ISSS is in the process of developing an IT Security Strategy that will include policy regarding the use of external storage providers.

Recommendation 13

The Board recommends that the Council takes steps to ensure that the Key Risk Register is managed effectively, and also that consideration is given to how possible inter-dependencies between risks can be taken into account.

Response: The Council and the Audit Committee formally review the Strategic Key Risk Register annually. Risk Management is a standing item on the Audit Committee’s agenda. The Risk Steering Committee is a Committee of the Council and is chaired by the Senior Pro-Vice-Chancellor. The Chair of the Audit Committee is a member of the Risk Steering Committee.

The ‘owners’ of the seventeen strategic risks on the Key Risk Register are asked, twice a year, to review and update the risks for which they are responsible. The updated Key Risk Register is then scrutinized by the Risk Steering Committee. The Committee routinely considers whether there are new strategic risks which ought to be added to the Key Risk Register in response to changes within the University and in the wider national and international context. The Committee considers the risks as a gathered portfolio and not just as stand-alone risks. In 2011, the Risk Steering Committee agreed that each individual risk assessment should include a cross-reference to other related risks. This clearly sets out the interrelationship and interdependency of many of the risks and is an explicit recognition that improvement or detriment in one risk area can affect others.

The Key Risk Register is available at: http://www.admin.cam.ac.uk/cam-only/offices/secretariat/risk/register/.

Annex BGlossary of terms

CAm

Cambridge in America

Chest

An income stream of funding council grants, Home and Overseas fees, endowment income, a share of research grant overheads, transfers from CUP and Cambridge Assessment, and certain other operating income.

CPS

Cambridge University Assistants’ Contributory Pension Scheme

CUDAR

Cambridge University Development and Alumni Relations

CUEF

Cambridge University Endowment Fund

CUP or the Press

Cambridge University Press

CUSU

Cambridge University Students’ Union

HEFCE

Higher Education Funding Council for England

HR

Human Resources

IO

Investment Office

PVC

Pro-Vice-Chancellor

RCUK

Research Councils UK

REF

Research Excellence Framework

UAS

Unified Administrative Service (of the University)

USS

Universities Superannuation Scheme

Footnotes